Gate.io faces insolvency issues due to CEO arrest and $130 million net outflow in 24 hours.
The cryptocurrency exchange Gate.io has been facing rumors of insolvency lately, after the arrest of Multichain CEO Zhaojun and concerns about the Multichain treasury being backed by 30%. Due to these rumors, there has been an increased number of withdrawals from the exchange, with a net outflow of $131 million in the last 24 hours alone. To put this in perspective, the 7-day net outflow from Gate.io is $144.8 million, according to data compiled by Nansen.
Gate.io Denies Liquidity Issues
The rumors about Gate.io’s insolvency come from a tweet that alleges a connection between the exchange and Multichain following the arrest of Multichain CEO Zhaojun. The tweet claims that Gate.io is facing insolvency due to its involvement with Multichain and the potential impact of Zhaojun’s arrest on the Multichain treasury.
Despite these rumors, Gate.io has denied the insolvency claims and reassured its users that all funds are safe. The cryptocurrency exchange has recently addressed rumors about its operations and withdrawals. Gate.io has reassured users that its operations are sound, withdrawals are working properly, and there are no problems with rumored operations or withdrawals.
Furthermore, Gate.io emphasizes its commitment to providing users with safe, fast, and reliable virtual asset services and encourages users to be cautious of any unsolicited calls or messages claiming to be from Gate.io. The exchange currently holds $2.4 billion in assets, including 18% in Gate.io’s native token GT, 15% in Ethereum (ETH), 15% in Bitcoin (BTC), and other cryptocurrencies.
Despite these reassurances, the increase in withdrawals from Gate.io highlights the impact that rumors and speculation can have on the crypto market, particularly in times of uncertainty. However, Gate.io has stated that it has no direct connection to Multichain and that Zhaojun’s arrest does not affect its operations. The exchange has also emphasized that all funds are held in cold storage, providing an additional layer of security for user assets.
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Binance CEO CZ Issues Warning
Binance CEO CZ has recently advised investors to Secure Asset Fund for User (SAFU) after citing a tweet from Multichain, which reported multiple issues with their protocol due to unforeseeable circumstances. The tweet stated that the team had done everything possible to maintain the protocol running but could not contact CEO Zhaojun and obtain the necessary server access for maintenance.
The tweet also mentioned an issue with the scanning node network of Router5, which affected the normal cross-chain service of some chains. To protect users’ interests, the corresponding cross-chain service for the affected chain was suspended on the User Interface (UI). This issue was also reported to have occurred on Router2 the week before.
The timing of CZ’s advice to SAFU and the issues reported by Multichain has led to speculation that this may be an early warning to investors about the potential dangers associated with Gate.io. However, it is important to note that CZ did not explicitly mention Gate.io in his tweet, and there is no direct connection between Gate.io and Multichain.
Featured image from Unsplash, chart from TradingView.com